Bitcoin experienced a sharp pullback on Thursday, falling to $79,933 during Asian trading hours, representing a decline of approximately 1.2% over a 24-hour period. The cryptocurrency had previously maintained support above the $80,000 level for a full week before the recent decline. The latest inflation data has dealt a severe blow to Bitcoin's recovery prospects, with the Consumer Price Index for April rising 0.4% month-over-month and 2.8% year-over-year, significantly overshooting economist forecasts of 0.2% and 2.7% respectively. This hotter-than-expected inflation data has crushed Federal Reserve rate cut prospects, with the CME FedWatch tool now showing a 97.1% probability that the Federal Reserve holds rates steady at its June meeting. The rate cut cavalry isn't coming in June, probably not in September, and potentially not at all this year, with there now over a 65% chance that rates stay exactly where they are through the end of the year. Major financial institutions are pushing their rate cut forecasts into 2027 and even 2028, while the 10-year Treasury yield climbed to 4.44% following the CPI print.
The latest decline coincided with the closely watched Trump-Xi summit in Beijing, where U.S. President Donald Trump and Chinese President Xi Jinping officially began bilateral talks. Xi warned that the world is entering "a transformation not seen in a century" and questioned whether both countries could avoid future conflict over global power dynamics. This geopolitical uncertainty has created additional pressure on cryptocurrency markets, with broader crypto sentiment shifting back toward fear after two consecutive inflation surprises reduced expectations for Federal Reserve rate cuts later this year. The latest U.S. producer price index reportedly came in at 1.4% month-over-month versus expectations of 0.5%, while CPI inflation earlier this week rose to 3.8%, the highest reading in nearly three years. Oil markets also stayed elevated as investors monitored the summit and rising geopolitical concerns around Taiwan and global trade routes, with Brent crude trading above $105 per barrel and WTI crude hovering near the mid-$90 range.
The Bitcoin decline has spread across the entire cryptocurrency market, with Ethereum falling around 2% near $2,250, while XRP slipped toward $1.43. Solana led major losses with a drop of over 5%, though among meme coins, Dogecoin remained one of the few majors trading slightly positive. Despite weakness across crypto markets, AI-related tech stocks continued outperforming, with NVIDIA remaining one of the strongest-performing companies globally and now worth more than the GDP of every country except the United States and China. Meanwhile, Cisco surged after issuing stronger-than-expected guidance, helping Nasdaq futures remain positive even as crypto markets corrected. The derivatives markets showed elevated short positioning ahead of key inflation reports, with open interest climbing between May 8 and May 10 while funding rates stayed negative.
Another analyst, Carmelo Alemán, linked the move to concentrated whale selling, saying wallets holding between 1,000 and 10,000 BTC sold some 7,650 BTC during the decline, which was equal to about $616 million at average prices near $80,500. That period saw Bitcoin drop from around $81,000 to below $79,000 while open interest went up by almost $590 million, a sign that fresh leverage entered the market as prices fell. The derivatives market was pricing in a decline, with open interest climbing to 1.04 times the analysis period's average between May 8 and 10, while funding rates turned negative and kept deepening into May 10. On May 12 alone, long liquidations reached 11.8 times the short liquidations, with a total of approximately $109.7 million in long positions forcefully liquidated over three days from May 11-13, acting as the primary driver of the crash.
The platform emphasizes that cloud mining should be viewed as part of a long-term digital asset strategy rather than a tool for quick speculative profits. For now, Easy On Chain suggests traders should focus on two signals: whether exchange netflows return negative, which would show renewed withdrawals, and whether liquidation pressure in leveraged longs begins to cool. Until then, they claim, Bitcoin's attempts to reclaim $82,000 may continue running into resistance. Despite current market pressures, crypto analyst Ted Pillows suggests that if Bitcoin reclaims the $80,000 level, it could rally towards the $82,000 zone again, though the recovery will depend on these critical market conditions being met. The latest developments show that while geopolitical tensions and inflation concerns continue to pressure cryptocurrency markets, regulatory progress through the CLARITY Act provides some positive momentum for long-term market stability. However, many analysts are now characterizing Bitcoin more as a high-risk asset than a reliable inflation hedge, as when inflation surprises to the upside and Bitcoin drops rather than rallies, the "store of value" argument takes a significant hit.
